Plus: are too many bands on tour? June 24, 2024 Sign Up | View online Hi! A quick programming note: we’re taking next week off for Canada Day! We’ll be back with something special on July 8. In the meantime, if you miss us, you can catch up on the TLDR podcast. Enjoy the holiday! IN THIS ISSUE 8 min read 🛫 Exorbitant airfares 🥵 Hellish heat 🎤 Cancelled concerts Yes, JLo’s undersold (then cancelled) tour might mean she’s in her flop era. But plenty of other A-list artists are also having trouble selling tickets. We explain below. | Epic THE WEEK IN MARKETS Buy Low … Buy High? If the first rule of investing is “buy low, sell high,” what’s an investor supposed to do during a sustained rally like this one (which featured yet another record close last week in the U.S. markets)? No one wants to overpay for stocks, much less be the schlemiel who went all in on, say, October 5, 2008, the day before the bottom fell out. Well, as JP Morgan recently observed, “buy low, buy all-time high” has historically been a sound strategy, too. Stock rallies can last for years, since rising stocks and a booming economy tend to self-reinforce each other. And you run the risk of missing out on big returns by sitting on the sidelines. No one would’ve wanted to be the schlemiel who sat on their hands for these last eight months. So, while it might go against the adage, the best move is (likely) to keep doing your thing: saving, investing, and staying diversified. THE WEEK IN ONE NUMBER 324,000% Nvidia’s stock growth since its IPO on Jan. 22, 1999. Nvidia briefly surpassed Microsoft last week as the world’s most valuable company. WHAT HAPPENED LAST WEEK IMPORTANT Airfares are soaring. Prices were expected to drop as post-COVID travel demand eased off, but instead a new report found that domestic flights cost 14% more this summer than they did a year ago. Prices for puddle jumps are up the most. (E.g., Edmonton to Vancouver: +82%) Why? Airline consolidation, for one. This time last year, Lynx and Swoop still existed (RIP), and WestJet hadn’t yet swallowed up Sunwing. (The former now controls more than 72% of seats in all of Western Canada.) Planes are another problem: Boeing has slowed production to prevent more mid-flight safety fiascos. Extreme heat ain’t cheap. Cities throughout the Maritime provinces hit record-high temperatures last week, while heat warnings went into effect in Ontario and Quebec. The brutal temps are bad for people, animals, and the ice caps, not to mention labour productivity and crop yields. One headline-grabbing study estimated that extreme weather will make the world 19% poorer by 2049 than if the climate had remained stable. But there’s reason for optimism: The Economist reported that solar-energy capacity has outpaced predictions by 3X on average. (This chart made the rounds last week.) At this rate, solar energy could become the top energy source globally by the 2040s, which could help us avoid the most dire climate scenarios. INTERESTING Are too many bands on tour? Some A-list musicians not named Taylor Swift or Olivia Rodrigo have done something curious this summer — struggled to sell tickets for their arena shows. The Black Keys and JLo cancelled their tours owing to weak sales, while you can score Neil Young tickets for less than $20. What’s going on? Concertgoers aren’t staying in more: ticket sales are up across the board. The trouble is that So. Many. Artists. are on the road, since touring is about the only way for them to make money in the streaming era. As a result, there’s more competition to get butts in seats, and charging US$1,000 for floor tickets, as JLo did, probably isn’t the way to do it. It’s also just harder to be an arena-filling megastar these days thanks to cultural fragmentation (another side effect of streaming). Rich millennials feel so-so about stocks. The biggest wealth transfer in history is underway, as baby boomers pass along US$84 trillion to their heirs. Bank of America asked a few hundred youngish rich folks (more precisely: 21- to 43-year-olds with US$3 million or more in assets) what they’re buying. The nouveau riche expressed interest in alt investments, crypto, real estate, and luxury watches. More surprising, three-quarters of respondents said they’re souring on stocks and bonds; these investments make up less than 44% of their portfolios, whereas they’re 70% of older investors’ holdings. Most of these young millionaires lived through two ugly bear markets (in ’00-’02 and ’08-’09) at formative ages, which might help to explain their stock aversion. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 📵 Objects on your screen are phonier than they appear: U.S. Surgeon General calls for warning labels on social media. Source 🥃 Liquor Control Board of Ontario employees vote to authorize a strike next month. “Dry July” does have a certain ring. Source 🤠 Calgary Stampede will go on despite the city’s emergency-level water shortage. It’s fine, Mötley Crüe can shower together. Source 👶 Pinwheel’s internet-less kids’ smartphone is now available in Canada, if you’re sick of your kids commenting on your dance videos. Source CRASH & BURN TO THE MOON 💸 U.S. Justice Department sues Adobe for making subscriptions hard to cancel. “We have an Adobe subscription?” asks rest of America. Source ✈️ WestJet has started charging $25 to book tickets by phone. The hold music is good but not that good. Source 🍔 McDonald’s is ending its AI drive-through experiment. Want to return to simpler times when a real person got your order wrong. Source 🇪🇬 Image on coffin of Egyptian mummy bears uncanny resemblance to Marge Simpson. Duff Beer can found inside even stranger. Source WHO CARES THIS WEEK ON THE PODCAST THE BIG IMPORTANT STORY TAXES A Regular Human’s Guide to Capital Gains Over the past few months, there’s been a lot of shouting in Ottawa about proposed changes to the government’s capital-gains tax system. The process of making these changes into law is still ongoing, but if the new rule passes as expected, it will be retroactive to June 25. Which means that anything that happens with your capital gains on or after that date will be subject to the tax changes. Since we know that you're interested in being smart with your money (and, of course, fascinated by tax law) we have devised this useful guide. Read on! The Basics: A capital gain is the money you make when you sell an asset — a stock, for example — for more than you paid for it. Some of this profit gets counted as income for tax purposes, but it’s taxed less than your normal working income. Under the current rules, exactly half of capital gains are counted as income. Say you had $50,000 of taxable income from your job in 2023 and sold a single share of Apple for a $100 profit. Half, or $50, of that profit would be added to your total taxable income, which would now be $50,050. Assuming the new law goes into effect, as of June 25, you’ll be taxed the same way for the first $250,000 in capital gains, but anything you make over $250,000 will be added to your income at a rate of 66%. Or, to be precise, 66⅔%. (Note: this is true only for individuals; for corporations, all capital gains will be added to income at the rate of 66.67%) An Example: Under the new rule, say you made $1,000,000 selling stocks (congratulations on your early investment in Nvidia!). The first $250,000 of gains would add $125,000 (50% of $250K) to your taxable income. The remaining $750,000 would add $500,000 (two-thirds of $750K) to your taxable income. All told, you’d have $625,000 in additional taxable income thanks to your stock sale. How is this all going to affect you, a normal person? Let’s go over some questions you might have: I just sold my house. Do I really have to pay taxes on two-thirds of the appreciation over $250,000? I’m screwed! You’re not screwed! You don’t have to pay any capital gains taxes on profits if it’s your primary residence. (See if your home qualifies here.) The news isn’t as good for second homes; if you sell your cottage, it’ll be subject to capital-gains taxes. What about money I made by selling shares in an index fund that I bought using a registered retirement account? That stuff is still tax-free, right? That’s right. You generally don’t have to pay taxes on sales of assets held in RRSPs or TFSAs, so long as you don’t withdraw the proceeds prematurely. The CRA does, however, impose capital-gains taxes on TFSA accounts if it decides those accounts are involved in active trading. Basically, you’re not supposed to day-trade in a TFSA. I own my own business. How does the change to the corporate rate affect me? Remember how we mentioned that for individuals that first $250,000 of capital gains is taxed the same way (50% added to income) as it has been, and how that’s not true for companies? That means if you own a company, you may want to restructure some things. Moving some of its assets into your name could save you some money (as long as you don’t break any rules). To make things more complicated, owners of certain kinds of Canada-based businesses are exempt from paying taxes on (some of) the money they make if they sell their stake. This is something you should consult a tax professional about. So wait: now that I can get taxed more on money I make investing, should I change up how I invest? The short answer is: it probably doesn’t change much if you’re a regular investor. While all these details are important (especially if you’re figuring out how many of your assets to sell in a given year and what your tax liability will be) the big picture is the same: the money you make by saving and investing is still taxed at a lower rate than your salary or work income (basically all of which is taxed), and the money you make by investing in tax-advantaged accounts is taxed least of all. Keep doing those things, and you’ll be able to handle whatever happens to the tax rate. —Ben Mathis-Lilley OTHER VERY GOOD READS 🌽 How Cornhole Went Pro* How the sport quietly became a TV success story. | The New York Times Magazine 🛢️ RBC is Feeling the Heat Over Fossil Fuels The bank was declared the top financer of fossil-fuel projects this year. | The Narwhal 💰 What It’s Like to Get Rich as a Nvidia Engineer* “I’ve been splurging. I need to slow down.” | Intelligencer *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. POSTS OF WISDOM Jenny from the big block of open seats. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (senior lifecycle marketing specialist), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE Past performance does not guarantee future results. 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